A recently approved application submitted to the Internal Revenue Service for not-for-profit status by Southern Tier High Technology Incubator, Inc., the parent entity behind the proposed $22 million project, provides an early glimpse into how it will operate and the challenges that lie ahead to close a multimillion-dollar fundraising gap.

The IRS application, drafted in mid-2012, indicates there were plans to raise $22 million by June 2013 to build the 54,000-square-foot-facility in downtown Binghamton, where academic research would be converted into Southern Tier companies and jobs.

However, state and federal funds will come at a slower pace than originally expected and plans have been adjusted.

Binghamton University President Harvey Stenger, who has led the charge to construct the proposed incubator, said officials are now looking at a phased approach.

“You look at something like the incubator downtown, and you say ‘Why wasn’t there one here before?’ Well it’s not easy to do,” Stenger said. “When you take on something that seems logical and obvious and it has never been done before, it’s probably because it’s hard to do.”

The 61-page set of documents connected to the IRS application for Southern Tier High Technology Incubator, Inc., also define a balance of power that would be shared between Binghamton University and its non-profit fundraising arm — the Foundation of the State University of New York at Binghamton Inc.

While hurdles remain, few have questioned the approach of latching the Southern Tier’s economic future onto innovations growing out of local academic institutions.

“Our region, once known for cutting-edge technology, will have the opportunity to regain, I feel, our standing as a home to innovation,” Broome County Executive Debbie Preston said of the project.

Fundraising

IRS documents outline a plan to raise $22 million by June 13. So far, $9 million has been committed.

The original fundraising program, as outlined in the documents, called for:

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• $15 million from the state Regional Economic Development Council;

• $5 million from the federal Economic Development Administration’s disaster relief program;

• $2 million from the Broome County Industrial Development Agency.

Stenger said the original $15 million request from the state Regional Economic Development Council was sized down after discussions with state officials.

“They said ‘That’s big — that’s going to be the largest (Regional Economic Development Council) project in the entire state.’ And I said, ‘It could be the best one, though. Why do we have to say it should be smaller?’” Stenger said.

Eventually, the Southern Tier Regional Economic Development Council decided on a three-phase approach: a $7 million request the first year, $3 million in the second year, and another $3 million in year three.

“I think that once the Regional Economic Development Council process started, and you saw what kind of projects the Southern Tier was putting forth, that the slice of the pie that we were looking for (to begin with) may have been a little aggressive,” said Sheila Doyle, executive director of Southern Tier High Technology Incubator, Inc.

The first request was successful, with $7 million awarded as part of the Southern Tier’s $91.1 million development package awarded in December. The Broome IDA has also committed its $2 million, opening a window for work to start at the 2.5-acre site later this year.

“The IDA has a little bit more flexibility in their funds,” Stenger said, “so that they’ll be able to help us get some things started right away, like site preparation and excavation and kind of cleaning up the site a little bit.”

Funding from the Economic Development Administration has also been slower to materialize. After two unsuccessful applications through the EDA’s disaster relief program — linked to the recovery from Tropical Storm Lee — stakeholders in the incubator were encouraged to reapply through the standard public works program.

The effort to secure EDA funds got a boost when Sen. Charles Schumer, D-N.Y., brought a regional official from the administration to the site on Jan. 17, said Dick D’Attilio, executive director of the Broome County Industrial Development Agency.

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“They were even willing to review our drafts prior to submission to ensure that if we were somehow missing something that they would point it out,” he said. “So I think from that standpoint, I think we’re in good stead.”

D’Attilio said the IDA has also done the work of bundling about eight parcels of land that make up the site, which is located about one-quarter mile from Binghamton City Hall.

The land, formerly the location of the county’s bus depot, is bounded by Hawley and Lisle streets, Lisle Avenue and the Piaker & Lyons accounting firm. It was donated by Broome County to the IDA late last year.

Schumer, in a written statement, said the project “will transform the university’s incredible research into real jobs and high-tech businesses.”

“The merits of this transformative project speak for themselves,” he said, “and I will continue to fight for funding opportunities, like those through the federal Economic Development Administration, to see this project to its completion.”

Directors

Like most university-affiliated incubators in New York, the Southern Tier High Technology Incubator, Inc., will not be a public agency or a branch of the university, but a separate nonprofit organization.

“We formed the nonprofit with the foundation and the university as supporting organizations, and that’s traditionally the model that is followed in terms of formation,” Doyle said.

The bylaws for Southern Tier High Technology Incubator, Inc., filed with the IRS, indicate ties may be closer with the foundation than the university, although the two have significant overlap. The board of directors will be appointed annually by Binghamton University and the BU Foundation, and the majority must also be directors of the BU Foundation.

The board of directors currently consists of:

• James Orband, Managing Partner, Hinman, Howard & Kattell, who is the secretary of the BU Foundation;

• Baghat Sammakia, BU’s Vice President for Research;

• James VanVoorst, BU’s Vice President of Adminstration and a director of the BU Foundation;

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• BU President Harvey Stenger.

Doyle, the executive director of Southern Tier High Technology Incubator, Inc., also serves as the associate executive director of the BU Foundation and the associate vice president for external affairs for BU. Her salary is paid by BU and not the foundation, although she works for both.

It is expected that a search will begin soon for a director of the incubator, Doyle said.

Transparency

Unlike Binghamton University, the BU Foundation is not considered a public agency and is not subject to the state Freedom of Information Law or state Open Meetings Law. Neither is Southern Tier High Technology Incubator, Inc.

That model is common at universities across New York. But objections to the lack of transparency surrounding university foundations have recently been the subject of criticism from activists, officials and some state lawmakers.

Broome County even sought to open the BU Foundation’s records with a lawsuit in 2011, when Assistant County Attorney Holly Zurenda-Cruz filed a petition asking for access to the BU Foundation’s mineral lease documents.

Binghamton University, Zurenda-Cruz argued, “exercises significant control and influence over the (BU) Foundation” and governing bodies of the two are “interlocking.” Judge Molly Fitzgerald disagreed and dismissed the lawsuit.

More recently, a group at the University of Buffalo successfully lobbied for the closure of the Shale Resources and Society Institute, arguing the institute’s affiliation with a foundation — rather than the public university — allowed it to conceal any potential ties to the oil and gas industry.

“The main issue here is that they’re getting significant public funding,” said Kevin Connor, director of the Buffalo-based Public Accountability Initiative, “without any of the transparency or accountability that goes along with that.”

Legislation that would grant the public access to the records of public university foundations is pending in the state Assembly and the state Senate.

Looking ahead

Officials working to make the incubator a reality say they are pleased with the progress that has been made so far.

Building the incubator in a phased approach “isn’t something that wasn’t anticipated,” Doyle said, and that resources will be used as they become available.

Stenger said staging the project is a sensible approach. The first part of the building may be constructed after $12 million to $13 million is secured, allowing the first set of tenants to come in before the rest of the funding falls into place.

By the end of the year, officials said, work may begin on the ground.

“When you get money from the Regional Economic Development Council, they have to see results,” Preston said. “So you can’t just let the money sit there.”

While much work remains, Stenger said, the Regional Economic Development Council funding, the Broome IDA’s support, and the endorsement of Schumer are “are all the right pieces.”